Itchy skin may cause your dog to excessively scratch, bite or lick their skin. Itching can be caused by many things such as parasites, dehydration, allergies, infections, humidity, congenital diseases or hormone levels. Itching scrapes the skin and hair follicle, thus damaging the top layer which protects and holds in moisture. Sebaceous glands secrete oils that protect the skin and coat. If moisture is too low and damage is done to these glands, they may not produce enough oil and lead to dry, itchy skin, or overproduce and cause oily skin. If the itching is not relieved, scratching can lead to skin damage and secondary infections.